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December 4, 2012 | By | Posted in Legislature

Smith: Budget outlook ‘not rosy or easy’

By Eric Boehm | PA Independent

HARRISBURG – After getting a first look at a mid-year budget briefing from the governor’s office, Speaker of the House Sam Smith, R-Jefferson, said budgeting for next year will be “not rosy or easy.”

Charles Zogby, budget secretary for Gov. Tom Corbett, briefed legislative leaders on the status of the state budget Tuesday afternoon in a closed-door meeting.

SMITH: The Speaker of the House says Pennsylvania’s budget outlook is not rosy next year, despite small revenue growth.

After leaving the briefing, Smith said the revenue numbers are “decent, compared to what we were looking at previously,” and said the big problems in the budget are no surprise: medical assistance and pensions.

“They will gobble up the growth in general fund revenues,” Smith said. “It’s not rosy or easy.”

Smith did not give figures, but a report released last month by the state Independent Fiscal Office projected $832 million in revenue growth in the current budget.

The same report projected increased pension costs to consume $500 million of that growth — with overall costs climbing from $1.1 billion to $1.6 billion — while medical assistance payments would eat another $100 million of it as they climb from $4.8 billion to $4.9 billion.

The IFO said modest expansion of revenue was due to limited growth of the tax base, demographic trends in the state and the continued phase out of the capital stock and franchise tax, which is paid by businesses.

Democrats on Monday said they wanted Corbett to temporarily halt the phase-out of the capital stock and franchise tax in order to boost revenues next year.

That, combined with closing other corporate tax loopholes and spending about $300 million in budgetary surplus carried forward from last fiscal year, could give the state nearly $1 billion to pad Pennsylvania’s bottom line without a needed broad-based tax increase, Democratic leaders said.

“Democrats have been proposing alternative savings in leu of trying to raise taxes, and I think it’s important to do that,” said Senate Minority Leader Jay Costa, D-Allegheny.

One area where Democrats said they would seek new revenues was for transportation infrastructure.

They called on Corbett to agree to raise the fees for drivers’ licenses and vehicle registrations, a proposal that came out of Corbett’s own commission on transportation funding in the summer of 2011.

Contact Boehm at Eric@PAIndependent.com and follow @PAIndependent on Twitter.

— Edited by Kelly Carson, kcarson@watchdog.org

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Eric Boehm is a reporter for PA Independent. He can be reached at Eric@PAIndependent.com or at (717) 350-0963.

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